Media mogul Rupert Murdoch has used Tony Abbott's elevation as Prime Minister to highlight Australia's emergence from a nation once riddled with "stuffy, narrow-minded elitism".

Speaking at the annual Lowy Lecture, Mr Murdoch pointed to the Prime Minister's open Catholicism to highlight how "class pretensions" in Australia once discriminated against Catholics.

"Thankfully, Australia has emerged from its inauspicious colonial beginnings to become a proud nation, a nation that overcame those primeval prejudices," Mr Murdoch told an exclusive audience in Sydney's town hall.

"We have a perfect example: Many of you will remember a day when a Catholic was rare in a Liberal cabinet.

"Those days are now behind us. And Prime Minister Tony Abbott is part of the proof."

In a wide ranging address, Mr Murdoch said Mr Abbott was "assuredly right" to nominate Indonesia as one of Australia's most important relationships because of its proximity and size.

And he urged "a friendly and open relationship" with China but signalled concerns about a possible economic contraction in the world's second biggest economy.